The business behind the show

NBC's new deal with affiliates may be topic of discussion at FCC

May 24, 2011 | 11:34
am

While Fox continues to fight over money its affiliates get from cable and satellite operators in return for carriage of their channels, NBC appears to have reached a peace accord on the issue with its local television station partners.

Last week in New York, NBC reached an agreement in principle that would give the network the ability to negotiate deals with pay-TV distributors on behalf of their affiliates as well as take a cut of that revenue.

The network and its affiliates are positioning this as a win for them and consumers. Though the two sides have not said what the split of so-called retransmission consent fees would be, the idea is that the stations have a better chance of getting more money from distributors if they team up and have NBC fronting for them than if they go it alone.

NBC and its affiliates also maintain that if they partner on negotiations, there may be fewer interruptions of service to consumers, although that may be more spin than reality.

This is not the first time that affiliates have given a network the right to negotiate their retransmission consent deals. When retransmission consent first became law about 20 years ago, Fox affiliates made the network their proxy, and Fox used the leverage to launch the cable channel FX.

But NBC’s plans may hit a bump in the road in the form of the Federal Communications Commission.

Earlier this year, after getting heat from Congress following several high-profile disputes between cable operators and programmers that led to or nearly led to service disruptions, the FCC launched a proceeding to review its retransmission consent rules to determine whether there were some actions it could take that would limit disruptions to consumers and make for smoother negotiations between programmers and distributors.

One of the aspects the FCC said it wanted to look at was the role a network played in the negotiation efforts of its affiliate.

Specifically, the FCC said it wanted comments on “whether it would be a per se violation for a station to agree to give a network with which it is affiliated the right to approve a retransmission consent agreement with an MVPD (Multichannel Video Programming Distributor) or to comply with such an approval position.”

Some broadcast networks have negotiated for the right to approve the retransmission consent deals of their affiliates and distributors say that makes getting deals done more difficult because the network’s demands for money from their affiliates leads the affiliates to demand for money for carriage of their signals.

Although NBC’s deal with its affiliates is not specifically what the FCC is seeking comment on, it is virtually the same thing. By turning over negotiating rights to NBC, the affiliates are basically letting the networks sign off on the contracts.

Cable operators are likely to make noise at the FCC about NBC’s efforts. Distributors would rather negotiate with one station in one town than a network representing multiple stations.

But the approach NBC is taking is really no different than how a cable network negotiates with a distributor, so distributors may have a tough time fighting this.

It won’t help distributors that the country’s biggest cable operator -- Comcast Corp. -- won’t be saying anything bad about NBC’s plan. That’s because, in a case of keeping your friends close and your enemies closer, Comcast now owns NBC.